Tesla with a 2% market share in the US, is valued more than Toyota, Volkswagen, Daimler, General Motors, and BMW combined (40% of the domestic market).
Toyota makes about $2,500 profit for every car sold. Tesla would need to make $50,000 per unit sold on average, or basically 100% profit on a Model 3, to justify the market cap.
Personally, I'm with you, I just don't see how Tesla's valuation is justified. Their cars have QC issues and they have very formidable competitors. If I had to buy a car, I'd pick the Porsche Taycan over any Tesla any time of the day (except maybe the Roadster, but it's not out yet).
That said, I have a few friends who bought it's shares and their rationale is that it's a "clean energy play", far bigger than cars and that their brand is going to be as valuable as Apple. Only time will tell I guess, everyone can put their money where their mouth is and shorting Tesla has been a pretty bad proposition so far.
And decentralized demand - e.g. individual investors and institutions to a degree (individuals who give their buy-sell power to an org) - will be more accurately voting at least than say the gullible layperson buying into the Bitcoin hype-MLM; most people buying Tesla stock arguably mostly aren't betting/investing based on nothing - there are many good, valid reasons to see Tesla taking off exponentially and even owning 40%+ of the EV market - and they're optimizing for battery-solar tech and energy business as well.
P.S. I'm not trying to convince anyone here of Tesla's value, I've shared some of my thoughts before, and there are plenty other people who have done a thorough job detailing the ecosystem and its potential.
Today value isn't about what Tesla does today, its about what people think Tesla will deliver in the future.
The numbers and profits per car are basically meaningless. You buy if you think the number will become better not of you think they are awesome now and there isn't much progress possible anymore.
Stock prices do not reflect current profits. Imagine if they did. If tsla was currently 50/share to be inline with your metric. How would you stop people from buying it at 60? Because using your math they will be worth 75+ next year when the other factories come online.
It's supposed to at least correlate with future free cash flow, which it doesn't do either. Sometimes I wonder if quantitative easing and corp tax cuts have distorted the stock market past the point where Benjamin Graham-style theories of value investing have become invalidated.
May I ask why are you comparing with ICE automakers? Tesla is much more than that. Wouldn’t your comparison be like only comparing Amazon’s Kindle vertical with the rest of the ebook reader market?
Comparing their asset balance with the market cap of its stock is complete nonsense.
Tesla has 100% access to the BTCs and other asset it holds but there is no access to the market cap. Its a fictive price tag on all existing shares. People use it to compare companies. The money does not exist anywhere and certainly can not be used by Tesla.
>Comparing their asset balance with the market cap of its stock is complete nonsense.
Ben Graham, one of Warren buffet's mentors, wrote a famous book called the "Intelligent Investor" which has several chapters on doing exactly that.
Think about it...if a company sells $10 billion in stock, the new stock adds $10 billion to their market cap and they get an extra $10 billion in cash which goes on their balance sheet. And likewise, a company can buy back shares and the reduction in marketcap from destroying shares is equal to the amount of cash assets being removed from the balance sheet. There's a link here.
> Comparing their asset balance with the market cap of its stock is complete nonsense
Eh, not really. They’re both stock (as opposed to flow) measures. And one is a subset of the other. That said, crypto as fraction of assets would be a more rigorous metric.
Not alt all. Mark cap is a fictive value. Assets hold by a company aren't fictive and are not part of the market cap at all.
Market cap is simply the price of all stocks at the current market price of one.
>crypto as fraction of assets
That would make more sense but also would need to include debts.
depend on the liquidity on that day also they could OTC sell so yes they can probably get the market price. However telling the market fist isnt going to help.
>There’s a reason companies list “cash and equivalents” and BTC isn’t included in that line on the balance sheet.
Yes, the reason is volatility and uncertain liquidity.
To compare BTC with cash equivalents you could use volume adjusted price over the last months, that would give a good short term cash value. But long term ofc its impossible to know what it may be worth.
Not quite sure how that's relevant to what I said, namely that assets hold by a company are not comparable to the companies market cap.